All Nippon Airways’ cargo arm is taking aim at the Asia-US and automotive markets as a way to differentiate itself and to strengthen its overall competitiveness.

“The market situation is not so easy right now,” says Toshiaki Toyama, president of ANA Cargo. “In order to maintain profitability or minimize loss, we need to adjust our freighter capacity in accordance with the market situation. As a combination carrier, we handle a lot of transit cargo between Europe or the US and Asia. We’re looking carefully at the role of each freighter flight and we’re planning to reduce some capacity for the winter season.”

Transit traffic between Asia and the US will increasingly be a major focus of ANA Cargo’s strategy going forward. This was given a large boost in July 2016, when the carrier launched its trans-Pacific joint venture with United Cargo.

“Frankly, we’ve been a little bit surprised because the response has been even better than we expected,” Toyama says. “In particular, we have a lot of manufacturer customers in Kyushu connecting to United’s San Francisco flight at Haneda and they seem to be very satisfied with the shorter lead times.”

The first phase of the joint venture began on July 5, covering eastbound cargo from Japan to Canada and the US.

“From the number of cross bookings between UA and us, we can see that the customers are very supportive of this programme,” says Toyama. “We’re preparing for the next phase for westbound traffic, which is scheduled to be early next year. Phase three will include the rest of Asia.”

Another opportunity exists in the expanded slot arrangement at Haneda Airport. In February 2016, the Japanese and US authorities agreed to give the two countries five day-time slot pairs and one evening slot pair each at Haneda, as opposed to the four evening slot pairs each country used to have. As a result, ANA has already decided to shift a New York and a Chicago flight from Narita to Haneda from late October 2016.

“From Japan to New York and Chicago, more than 50% of the total volume is transit cargo,” says Toyama. “The timing of the two flights enables morning connections at Haneda of about four hours from Shanghai, Singapore, Bangkok, Jakarta, Seoul, Taipei and Hong Kong.”

ANA is the only airline to operate its own cargo facility at Haneda, with an 8,800-square-metre warehouse next to the larger Tokyo International Air Cargo Terminal.

“We actually use TIACT too,” Toyama says. “I think it’s sufficient for now, because there’s a lot of vacant space at TIACT. We also want to minimize costs – Haneda is incredibly expensive and probably one of the most expensive [airports] in the world.”

He adds that ANA is in discussions with Japan Airlines and Nippon Cargo Airlines to jointly develop an e-cargo programme, and that he hopes that project to be at 100% by 2020.

Network expansion on the passenger side will also contribute positively to the cargo business. The airline launched Wuhan in April 2016, Phnom Penh this month, and is due to launch Mexico City in February 2017.

“These destinations are very attractive for the cargo business too,” says Toyama. “Mexico is an automobile manufacturing centre and Japanese manufacturers like Nissan and Honda have factories there. The supply chain doesn’t just include Japan but also major Asian points such as Tianjin, Guangzhou and Bangkok. We still have a few months until the launch but we’ve already received a lot of enquiries from automobile companies and forwarders.”

According to Toyama, Wuhan is an important target area for the carrier because of the Chinese government’s decision to shift development from the coast to inland areas.

“I think it’s a reasonable base but I’m not satisfied yet,” he says. “I expect we’ll be able to gradually increase our load to and from Wuhan. Nissan and a lot of semiconductor companies are there, so we’re talking with them and with forwarders about utilizing our network.”

Not wanting to lose out on growing e-commerce demand to mainland China, ANA Holdings invested in a young Japanese IT company called ACD in June to provide total logistics solutions including special customs clearance services into China. The first phase of the service is targeted at Japanese retailers and began in September, with plans to expand that to Taiwan, Korea and the US.

ANA Cargo’s fleet consists of 12 Boeing 767 freighters, which Toyama says is enough for now.

“In our mid-term strategy, we have plans in place to increase the fleet to 13 or 14 if we need to, depending on the market situation,” he says. “The advantage of the 767 is it allows us to access smaller and medium-sized markets such as Cambodia and Myanmar. Wuhan is also a candidate for the 767F, but it’s not yet at a level that requires a regular freighter. Our 767F network is designed around automobile-related demand. That’s why we’re operating it to Tianjin, Shanghai, Guangzhou, Jakarta and Bangkok.”

The range of the 767F restricts it predominantly to Asia. According to Toyama, ANA is looking carefully at the possibility of operating larger and longer-range freighters, particularly to the US.

“The passenger side is planning network expansion but they’re more aggressive on Asian routes,” Toyama says. “In order to achieve network balance in terms of cargo demand, we need more capacity to and from the US. The JV with United is one of the solutions, but if we can’t cover all the demand we will need to think about trans-Pacific freighters.”

One shouldn’t expect to see ANA Cargo’s blue and white livery on a 747-8F or 777F anytime soon though. And even if the carrier decides to go down the trans-Pacific road, it wouldn’t necessarily have to acquire and operate its own aircraft, with options such as charters or ACMI available.

“Of course, having a large-sized freighter is a dream for us,” says Toyama. “But I think we need to be realistic.”

By Jeffrey Lee

Asia Cargo News | Tokyo